What is an Audit Department?

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  • Written By: Osmand Vitez
  • Edited By: Jenn Walker
  • Last Modified Date: 16 January 2020
  • Copyright Protected:
    Conjecture Corporation
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An audit department is the business division responsible for reviewing a company’s accounting department and the accuracy of financial information released to internal or external stakeholders. Internal stakeholders usually include managers or individuals responsible for making decisions. External stakeholders may include banks, lenders, investors or the general public. These individuals rely on audited financial information to assess the company’s financial health and the ability of the company to remain a going concern in the business environment.

Large or publicly held companies usually devote a few individuals in their accounting department for specific internal audit purposes. Companies may use an internal audit department to review the internal controls or financial safeguards put in place to protect the integrity of the company’s financial information. Internal audits conducted by a company’s audit department are usually less formal than external audits conducted by public accounting firms. Accounting managers or controllers may use internal audits to make decisions regarding the work flow of the accounting department and decide if business operations need to improve their internal controls or other financial safeguards.


Smaller companies do not usually have an audit department specifically devoted to reviewing accounting functions. While small businesses may hire accountants to work directly for recording and reporting their financial information, these accountants usually double as the internal auditor for reviewing the company’s financial information processes. Many small businesses may decide to use a certified public accountant (CPA) to help them properly assess internal controls and the financial information work flow of the company. The CPA may also conduct basic audits for the small business to ensure that all financial information has been recorded accurately by the company’s accountants.

Public accounting firms usually have large audit departments devoted to providing audit services to business clients. These departments are usually run by a partner in the accounting firm who has specific auditing education and experience relating to the business environment. The audit partner is usually responsible for hiring individuals to work in the audit department who can provide independent audit services to clients.

Many public accounting firms hire recent college graduates to work in the accounting firm's audit department. These individuals can gain valuable knowledge regarding accounting principles or guidelines and the general work flow of the accounting environment. Audit departments are historically known as the best way college graduates can develop the necessary experience for obtaining their CPA license and improving their overall knowledge of accounting.



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